Comments on: Baker-Samwick does allow rental properties to be soldhttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/
A slice of lime in the sodaSun, 26 Oct 2014 19:05:02 +0000hourly1http://wordpress.org/?v=4.2.5By: CarneyRathttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/comment-page-1/#comment-4236
Thu, 16 Jul 2009 01:16:58 +0000http://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/#comment-4236Lindmark’s blog is weak
]]>By: Dollaredhttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/comment-page-1/#comment-4213
Wed, 15 Jul 2009 18:43:06 +0000http://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/#comment-4213But it looks like a good way to decrease the incentive to foreclose, and a good way to increase the incentive to short sale or rework the mortgage.

Since those are better outcomes than a foreclosure, I’m all for it.

]]>By: Rockfishhttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/comment-page-1/#comment-4212
Wed, 15 Jul 2009 18:03:44 +0000http://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/#comment-4212Agreed. This actually makes the program worse. The value of a rental property will not be the same as an owner-occupied one, so this will decrease the amount the bank can get for the foreclosed property. Even if the bank does sell it to someone willing to let the original owner/defaulter live there, what happens when they do move out? Does it get re-rented? Or is that “landlord” now trying to re-sell the house? How does the landlord make a business decision about this when the tenant has no lease or obligation to stay for a given term?
It’s a bad deal for anyone. Even worse, if it results in large numbers of properties permanently converted to rentals, it will depress property values in those neighborhoods in perpetuity.
Another one of those ideas that looks good at first blush, then dies on the details.
]]>By: Muji Samovarhttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/comment-page-1/#comment-4204
Wed, 15 Jul 2009 15:57:26 +0000http://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/#comment-4204Fair point, Gari, but using the same metrics, the areas that are most in need of assistance are not Gary, Indiana, but rather coastal cities where the bubble inflated most. Therefore, applying a New York/Los Angeles mindset IS appropriate. And on that measure, there is clearly far more appetite for real property unencumbered by leases than there are investors.

Further, said investors will be looking for a return somewhere in the 8% cap range. If you go to the market today, I suspect you’d see returns somewhere in the 4% cap range. The price would have to fall commensurate with market returns, thereby putting securitized investors in the following quandary: either sell at prices even below market prices for unleased houses, or be effectively precluded from selling until the borrower falls behind on rent or moves out.

Seems like a pretty crappy obligation to force a lender/investor to wait for someone to default twice: once on the mortgage, once on their lease.

]]>By: Gari N. Corphttp://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/comment-page-1/#comment-4200
Wed, 15 Jul 2009 15:23:24 +0000http://blogs.reuters.com/felix-salmon/2009/07/15/baker-samwick-does-allow-rental-properties-to-be-sold/#comment-4200But what does it say about who they can rent it to, and for what? I imagine that buying a foreclosed property which must be rented to the former owner would be rather like buying a property in NYC with a rent-controlled tenant – i.e. it depresses values. Maybe I’m rather foolishly applying a New York mindset to parts of the country that desperately need this bill, and where market rents and what the former owner would be able to pay are similar numbers. But by and large any restriction on the use of a property is going to depress its resale value, and therefore recoveries, no?
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